Last month’s Bain Brief looks at how some organisations are driving costs out of their business and making the savings stick. I’ve been asked to help build many a business case and you sometimes get the feeling the organisation you’re working with knows that they’re inflating the benefits. I’m sure you’ve likely worked in other organisations where there is a continous quest to drive cost out of the business by reducing headcount.
What do the successful companies know that the others don’t?
The companies that achieve it typically follow a common path with four key elements. The cost leaders:
Set targets based on external, market-based data, not on internal benchmarks;
Tailor cost-cutting efforts to their strategy;
Get the metrics right;
Focus on the “seams” of the organization, not just individual units.
Successful companies also know how to make cost-reduction initiatives stick. Rather than relying on exhortation and top-down missives, they launch comprehensive efforts to embed the message in the entire organization. Before long, the company develops a new consciousness—and a new culture—in which keeping costs low is a primary objective. This is the key to delivering sustained cost savings year after year.
- Capital Structure Case Study (ivythesis.typepad.com)
- Clarifying the Business Case for Sustainability and CSR (sustainablebrands.com)
- Staff engagement can help firms avoid disputes (premierlinedirect.co.uk)